LONDON: U.S. stock-market indexes closed lower for a second-straight day Tuesday, and the Dow Jones Industrial Average posted back-to-back declines of at least 100 points, as stocks were dogged by a rout in crude-oil prices.
The slump for stocks followed Nymex-traded oil prices, which settled at $37.65 a barrel, declining for the third straight session CLF6, +1.87% after trimming some of its earlier losses. Read: This bearish technical pattern points to even more pain for crude oil.
All three of the main stock-market indexes have closed lower in four out of the past five sessions.
The Dow DJIA, -0.92% finished 162.51, or 0.9%, to 17,568.00, paring losses after being more than 200 points lower earlier in the session. Exxon Mobil Corporation XOM, -2.83% was the largest decliner on the blue-chips benchmark, down 2.8%.
The S&P 500 index SPX, -0.65% finished 13.48 points, or 0.7%, lower at 2,063.59, led by declines in the materials sector, off 1.9%, and energy, down 1.5%. Only the S&P 500 health-care sector, up 0.2%, finished in positive territory of the benchmark’s 10 main sectors.
After flirting with a close in the green, the Nasdaq Composite COMP, -0.07% closed 3.57 points, or less than 0.1%, lower at 5,098.24. The iShares Nasdaq Biotechnology ETF IBB, +1.95% which closed 1.7% higher, helped limit some of the Nasdaq Composite’s losses.
Concerns about the price of crude oil were the primary driver of U.S. stock trading Tuesday, said Ryan Larson, head of equity trading at RBC Global Asset Management.
“I think equities are just tracking the very modest rebound in [West Texas Intermediate crude oil] and have come back toward session lows as WTI has moved lower,” Larson said.
Jack Albin, chief investment office at BMO Private Bank, said the recent drop in oil prices below the $40 threshold is seen as causing the already precarious credit outlook of many debt-laden energy companies to worsen.
“There’s kind of a commonly held belief that the cost of production for shale oil is $40 a barrel,” Albin said. “[Oil] dropping below $40 [a barrel] seems to really have gotten investors attention.”
Oil futures have been under severe pressure since the Organization of the Petroleum Exporting Countries agreed to keep pumping crude at current production levels at a meeting in Vienna on Friday.
